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Afreximbank woos super-rich Kenyans with Sh31bn shareholding offer

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Commercial Bank of Africa, Capital Limited CEO Kathure Nyamu (left) and AFRIEXIMBANK executive vice president George Elombi during the launch of Depository Receipt to open shareholding to the public at the Afreximbank at Crown Plaza Hotel in Nairobi on September 7, 2017. PHOTO | SALATON NJAU | NMG

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Summary

  • The Cairo-headquartered trade financier is targeting between $100 million (Sh10.32 billion) and $300 million (Sh30.97 billion) in the ongoing sale which opened on July 25.

  • This is part of Afreximbank’s plan to increase its capitalization by $1 billion in five years to meet growing demand for funds in Africa.

  • The sale of the DRs, backed with class D shares, closes September 22.

  • It will be listed on the Stock Exchange of Mauritius, where returns are tax-free, on October 4.

African Export and Import Bank (Afreximbank) on Thursday wooed fund managers and high-net worth individuals in Nairobi to buy into its depository receipts (DRs) through which it is seeking to raise up to Sh30.97 billion by September 22.

The Cairo-headquartered trade financier is targeting between $100 million (Sh10.32 billion) and $300 million (Sh30.97 billion) in the ongoing sale which opened on July 25. This is part of Afreximbank’s plan to increase its capitalization by $1 billion in five years to meet growing demand for funds in Africa.

Through the issue of the DRs, the lender is opening up its shareholding to the public who will own class D shares.  Depository receipts are instruments through which companies raise equity capital in other jurisdictions without physical listing the shares on an exchange in that jusrisdiction.

“The money raised here will be used to industrialise our continent. There’s need to do something about industrialising this continent, otherwise we will continue to be exposed periodic market shocks in export commodities, ” Afeximbank’s executive vice president George Elombi told a press conference after meeting investors.

The bank has priced its DR unit at $4.30 (Sh443.93) apiece, but one will need to buy 10,000 units to own a class D share in the lender as a share is valued at $43,000 (Sh4.44 million) based on its net asset value in December 2016. Minimum investment in the DRs issue is $30,000 (Sh3.1 million).

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Nairobi is the third stop for the launch of Afreximbank’s DRs after similar launches in Mauritius and Nigeria on August 9 and 23, respectively.

The sale of the DRs, backed with class D shares, closes September 22. It will be listed on the Stock Exchange of Mauritius, where returns are tax-free, on October 4.

CBA Capital is the co-transaction adviser to the SBM Mauritius Asset Managers, the lead arranger.

CBA Capital chief executive Kathure Nyamu said she expects increased interest from targeted domestic investors, largely pension funds, citing reduced risk as the instrument and returns are dollar-denominated.

“Afrexim being a pan-African institution with its risks seated across the entire continent provides a low correlation to the current banking stocks which are really concentrated and which are where most of our institutional investors invest,” she said. “The message has well been received by our investors this morning.”

Afrexim bank has four classes of shareholders. Class “A” is made up African governments, central banks, and public institutions, Class “B” constitute African financial institutions, class “C” shareholders are non-African instutions and private investors, while individual or an entity can be allotted shares under class “D”.

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